Cabinet ‘split’ over pension lifeboat fund
Senior Cabinet officials have been accused of sitting on a plan that would compensate 125,000 workers whose pension schemes have collapsed.
Gordon Brown and Alistair Darling have reportedly blocked proposals for a £725 million injection for the Financial Assistance Scheme.
According to a report by Andy Young, the government’s chief actuary, this would see workers whose pension schemes collapsed before 2005 compensated for 90 per cent of their lost savings.
This would bring compensation in line with support for savers covered by the Pension Protection Fund, which covers schemes that collapsed since 2005.
The existing lifeboat fund for pre-2005 victims compensates savers for 80 per cent of lost funds and is notoriously slow to pay out.
Mr Young’s report argues the Department of Work and Pensions (DWP) could afford more generous payouts.
Pensions secretary Peter Hain is reportedly backing its proposals but has been blocked by Mr Brown and Mr Darling. He has privately told reporters the government is handling the issue “absolutely appallingly”.
The Conservatives claim Mr Hain has now taken the “quite extraordinary” step of urging the Pensions Action Group to lobby Downing Street to accept Mr Young’s proposals.
Shadow pensions secretary Chris Grayling said: “This is a quite extraordinary state of affairs to have a Cabinet minister urging an external campaign group to lobby the prime minister to help him get his way.
“The fact that Gordon Brown is personally blocking a rescue package for pensioners who’ve lost out as a result of his policies is just disgraceful.”
Dr Ros Altman, who campaigns with the Pensions Action Group, insists funds are available to help savers.
“It just needs to be paid,” she said last night. “Northern Rock was sorted out in days – these people have been waiting years.”
The Liberal Democrats said the government should be “ashamed” of its approach and are calling for all savers to be compensated at the same level as the Pension Protection Fund.
Lib Dem pension spokesman Danny Alexander said: “There is a powerful moral argument for doing so, and a small cost.
“Now it seems that the Young review has identified much of the resource needed, reducing yet further the already small burden on the taxpayer.
“Mr Brown’s incompetent government now seems incapable of doing the right thing, even when it is blatantly obvious what is needed.”
The DWP said it is still considering Mr Young’s findings carefully and will make a decision in due course.
A DWP spokesman said: “Andrew Young was asked to examine ways of using the residual assets in FAS pension schemes more effectively for the benefit of those who have lost their pensions.”
